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1 - 10 of 11 (0.39 seconds)Section 48 in The Income Tax Act, 1961 [Entire Act]
Section 49 in The Income Tax Act, 1961 [Entire Act]
The Commissioner Of Income-Tax, West ... vs M/S. Vegetables Products Ltd on 29 January, 1973
10. He also placed reliance on the decision of the Special Bench in the
case of Vireet Investment Pvt. Ltd., 58 ITR (Trib.) 313 (SB) wherein the
Special Bench, following the decision of the Hon'ble Supreme Court in the
case of CIT Vs. Vegetable Products Ltd. 88 ITR 192 (SC) held that when
two views are possible the view favourable to the Assessee should be
followed.
Section 43 in The Income Tax Act, 1961 [Entire Act]
Section 45 in The Income Tax Act, 1961 [Entire Act]
Section 288 in The Income Tax Act, 1961 [Entire Act]
Morvi Industries Ltd vs Commissioner Of Income Tax ... on 5 October, 1971
"8. In the present case, from the reading of the above clauses of
the agreement the deferred consideration is payable over a period of
four years i.e. 2006-07, 2007-08, 2008-09 and 2009-10. Further the
ITA No.2551/Bang/2019
Page 13 of 18
formula prescribed in the agreement itself makes it clear that the
deferred consideration to be received by the respondent-assessee in
the four years would be dependent upon the profits made by M/s.
Unisol in each of the years. Thus in case M/s. Unisol does not make
net profit in terms of the formula for the year under consideration for
payment of deferred consideration then no amount would be payable
to the respondent-assessee as deferred consideration. The
consideration of Rs.20 crores is not an assured consideration to be
received by the Shete family. It is only the maximum that could be
received. Therefore it is not a case where any consideration out of
Rs.20 crores or part thereof (after reducing Rs.2.70 crores) has been
received or has accrued to the respondent assessee. As observed by
the Apex Court in Morvi Industries Ltd. vs. CIT (1971) 82 ITR 835.
"The income can be said to accrue when it becomes due.... The
moment the income accrues, the assessee gets vested right to claim
that amount, even though not immediately." In fact the application of
formula in the agreement dated 25th January, 2006 itself makes the
amount which is receivable as deferred consideration contingent upon
the profits of M/s.Unisol and not an ascertained amount. Thus in the
subject assessment year no right to claim any particular amount gets
vested in the hands of the respondent-assessee. Therefore, entire
amount of Rs.20 crores which is sought to be taxed by the Assessing
Officer is not the amount which has accrued to the respondent-
assessee. The test of accrual is whether there is a right to receive the
amount though later and such right is legally enforceable.
The Income Tax Act, 1961
E. D. Sassoon And Company Ltd vs The Commissioner Of Income-Tax,Bombay ... on 14 May, 1954
In fact as
observed by the Supreme Court in E.D. Sassoon & Co. Ltd. Vs. CIT
(1954) 26 ITR 27 "It is clear therefore that income may accrue to an
assesee without the actual receipt of the same. If the assessee acquires
a right to receive the income, the income can be said to have accrued
to him though it may be received later on its being ascertained. The
basic conception is that he must have acquired a right to receive the
income. There must be a debt owed to him by somebody. There must
be as is otherwise expressed debitum in presenti, solvendum in futuro
.... .... ....". In this case all the co-owners of the shares of M/s.Unisol
have no right in the subject assessment year to receive Rs.20 crores
but that is the maximum which could be received by them. This
amount which could be received as deferred consideration is
dependent/contingent upon certain uncertain events, therefore, it
cannot be said to have accrued to the respondent-assessee. The
Tribunal in the impugned order has correctly held that what has to be
taxed is the amount received or accrued and not any notional or
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hypothetical income. As observed by the Apex Court in Commissioner
of Income-Tax vs. M/s. Shoorji Vallabdas and Co. (1962) 46 ITR 144
"Income-Tax is a levy on income. No doubt, the Income-Tax Act takes
into account two points of time at which liability to tax is attracted,
viz., the accrual of its income or its receipt; but the substance of the
matter is income, if income does not result, there cannot be a tax, even
though in book-keeping an entry is made about a hypothetical income,
which does not materialize." In this case Rs.20 crores cap in the
agreement is not income in the subject assessment year.